It is only eight years old and best known for collating funny videos of cats and so-called "listicles" of trivia (such as 40 Things That Will Make You Feel Old), but viral internet sensation BuzzFeed was on Monday valued at more than three times as much as the Washington Post, the venerable US newspaper whose exposure of the Watergate scandal brought down President Richard Nixon.

The website, set up by serial internet entrepreneur Jonah Peretti in New York in 2006, has secured $50m (£30m) of funding from Andreessen Horowitz, a US venture capital firm that has a strong record of picking the next big thing online, having pumped money into Facebook, Twitter, Skype, Foursquare, Pinterest and Airbnb.

The fresh injection of cash values BuzzFeed – which has expanded to employ 550 staff in New York, London, Sydney, Paris and elsewhere – at $850m (£506m). That compares with the $250m that Amazon founder Jeff Bezos paid for the 137-year-old Washington Post last year.

Chris Dixon, a general partner at Andreessen Horowitz, explained his reasoning. "We're in the midst of a major technological shift in which, increasingly, news and entertainment are being distributed on social networks and consumed on mobile devices," he said in a blogpost. "We believe BuzzFeed will emerge from this period as a pre-eminent media company."

Dixon, who will join BuzzFeed's board as part of the deal, said most established media players dismissed the site as a "toy".

But it has grown into a highly profitable news site that is expected to bring in revenue of more than $100m this year and now covers Syria, Iraq and the Gaza crisis – as well maintaining a whole section devoted to Gifs [animated pictures] of cats and the stream of list-based articles it is famous for, such as yesterday's 33 "Facts" Everybody Knows That Are Actually Total Lies (No 1: Drinking alcohol doesn't kill brain cells).

Dixon said BuzzFeed had "moved steadily upmarket" and employed more than 200 editorial staff covering politics, sports, business, entertainment and travel, with plans to "invest significantly more in high-quality content in the coming years".

The company is in the process of doubling the size of its foreign desk to 18 staff and is "hiring aggressively" across the rest of the site. BuzzFeed has also recently set up an investigation unit headed up by Pulitzer prizewinner Mark Schoofs.

There have, however, been stumbling blocks: most recently the sacking of one of its most high-profile writers following accusations of plagiarism.

It is also beefing up its video division into BuzzFeed Motion Pictures, which it said would "focus on all moving images from a Gif to feature film and everything in between".

Dixon said BuzzFeed, which boasts 150m readers a month on average, was now a "full stack startup" and as much of a media company as "[electric car firm] Tesla is a car company, Uber is a taxi company, or Netflix is a streaming movie company".

He said BuzzFeed was interesting because it was as focused on creating disruptive technology as on disrupting the media landscape. "BuzzFeed takes the internet and computer science seriously," he said. "Engineers are first-class citizens. Everything is built for mobile devices from the outset.

BuzzFeed's approach has proved phenomenally popular with young people, and users of social media such as Twitter, Facebook and Pinterest account for more than 75% of the site's traffic. BuzzFeed's writers are rewarded with bonuses not for the number of readers their articles attract but the number of times they are shared online.

Douglas McCabe, a media analyst at Enders Analysis, said traditional media companies that initially dismissed BuzzFeed as just "cats on skateboards" were already concerned about its ability to generate huge amounts of traffic and move in on the serious news agenda.

"BuzzFeed traffic has grown enormously – it is growing at a rate of 75% year on year and is reaching 30% of the internet audience in the US," he said.

BuzzFeed's young and engaged readers are also the most appealing to advertisers in an increasingly competitive marketplace. "Traditional media companies are already concerned," McCabe said. "There was a period when traditional businesses wrote them off as irrelevant, but then they didn't go away, and it took off. Now they really want to know what it is going on here and understand it."

Recent reports commissioned by the BBC and the New York Times have bemoaned the established media's slow response to BuzzFeed.

Peretti, 40, who also co-founded the Huffington Post and collected a huge payout when it was sold to AOL for $315m in 2011, said: "We created BuzzFeed because people still want to be informed, entertained and inspired, but the way they consume media has dramatically shifted.

"Today we think the time is perfect to grow our company, build our brand and greatly increase the content we are producing so we can be the number one digital media brand."